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Inside Radio
June 28, 2017
Cautiously Optimistic SCBA: Steady Growth Through Q3

The Southern California Broadcasters Association forecasts “steady” ad activity for a wide array of key ad categories for third quarter, and a “noteworthy” pace for news business development. “While caution is still the prevailing mood with some client categories, others will continue enjoying record months through the important Q3 consumer period,” SCBA president Thom Callahan says in the trade group's quarterly guidance report.

Booking business with marketers that have never used radio or have drifted away has been a top priority for broadcasters in the region. New Miller Kaplan Arase data cited in the report shows that strategy is panning out. Year-to-date through May, radio hauled in $25.9 million from new advertisers in Los Angeles and San Diego. “If radio's real strength is local, then this outstanding new business fact speaks loudly about the new partnerships that local and regional businesses have developed with SCBA's member radio stations and the inherent ROI in such volume,” Callahan says, adding that new business development “will only grow in the critical Q3 period.”

Still, Callahan says the business environment facing many of the region's larger ad categories is “ever dynamic and disruptive.” One category seeing a fair amount of turmoil is auto, which experienced four months of national sales declines that abated in May but are expected to fall 1.3% in June. Over the next several months the SCBA plans to lobby the auto industry and its agencies “to re-think and re-purchase their media from a much different perspective,” Callahan says. To make that pitch, the group is relying on “The Automotive Path to Purchase Study,” conducted by Nielsen. It suggests that 80% of auto ad buys should be in traditional media, such as radio and TV, and shows radio has the greatest weekly reach of auto buyers in the Southern California market, delivering 1.8 million people who plan on making a new vehicle purchase in the next 12 months and an additional 1.5 million people who plan to purchase a used vehicle in the same time frame. The lobbying campaign is well timed as SCBA projects a 4% Q3 decline in L.A. for auto dealers and dealer groups and a 2% dip for San Diego.

In other Q3 highlights from the trade group's analysis and forecast for radio ad spending in 25 key ad segments and subsets:

Professional Services: Continued growth in Q3, including 3.6% for L.A. and 3.2% for San Diego for personal and family legal services. “A significant trend will be legal advice and counsel for immigration issues as well as the burgeoning personal injury and environmental health claims segment continues to skyrocket in Southern California,” the report says.

Financial Services: Buoyed by an improving economy, the category (which consists primarily of consumer credit counseling and debt relief consolidation firms) is expected to boost its Q3 radio spend by 3.1% in L.A. and 2.3% in San Diego.

Home Furnishings/Home Flooring: This segment will grow by 7.3% in L.A. and 4.6% in San Diego.

Home Improvement: This $315 billion dollar industry is on track for a 4.1% increase for L.A. and a 5.5% increase for San Diego.

Cellular Carriers: After a Q2 slowdown, the SCBA now projects a Q3 increase to the tune of 3.1% in L.A. and a 1.8% in San Diego.

Restaurants: After jumping 22.3% in Q3, this category is expected to expand 4.5% in L.A. and 2.4% in San Diego.

Health Care: With health insurance companies pulling out of the Affordable Care Act and the uncertainties of the marketplace in California, the SCBA forecast calls for a 6% decline in L.A. and a 4.3% drop in San Diego. “This projection could change significantly if federal health care laws are changed, but for now, the SCBA remains cautious on this segment,” the report says.

Television/Networks/Cable: Continuing to suffer from disruption, SCBA expects a further decline of 5.1% for L.A. and flat radio ad revenue in San Diego.

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